Modest Growth Predicted for Construction Industry in 2013, According to McGraw-Hill Construction's Dodge Outlook Report
Construction Starts Expected to Rise in Housing, Commercial & Manufacturing Building Sectors, Offset by Declines in Public Works & Electric Utility Construction
WASHINGTON, Oct. 24, 2012 /PRNewswire/ -- McGraw-Hill Construction (http://www.construction.com/), part of The McGraw-Hill Companies (NYSE: MHP), today released its 2013 Dodge Construction Outlook, a mainstay in construction industry forecasting and business planning. The report predicts that total U.S. construction starts for 2013 will rise 6% to $483.7 billion, slightly higher than the 5% increase to $458 billion estimated for 2012.
"As reported by McGraw-Hill Construction, new construction starts in 2010 edged up 2%, followed by another 1% gain in 2011, and 2012 is headed for a 5% increase to $458 billion. This still leaves the volume of total construction starts 32% below the 2005 peak on a current dollar basis, and down about 50% when viewed on a constant dollar basis," said Robert Murray, McGraw-Hill Construction's Vice President of Economic Affairs. "The modest gains experienced during the past two years have in effect produced an extended bottom for construction starts, in which the process of recovery is being stretched out."
"The fiscal cliff poses a significant downside risk to the near-term prospects for the U.S. economy and the construction industry. Assuming that efforts to cushion the full extent of the fiscal cliff are successful next year, keeping the U.S. economy from sliding back into recession, then there are several positive factors to benefit construction, including low interest rates and improving market fundamentals for several project types," Murray continued.
Based on significant research and in-depth analysis of macro-trends, the 2013 Dodge Construction Outlook details the forecasts for each construction sector, as follows.
- Single family housing will grow 24% in dollars, corresponding to a 21% increase in units to 615,000 (McGraw-Hill Construction basis). The positives for single family housing have become more numerous – the pace of foreclosures has eased, home prices are stabilizing, and mortgage rates are at record lows.
- Multifamily housing will rise 16% in dollars and 14% in units, marking healthy percentage gains yet slower growth than what took place during 2011 and 2012. Improved market fundamentals will help to justify new construction, and this structure type continues to be viewed favorably by the real estate finance community.
- Commercial building will increase 12%, a slightly faster pace than the 5% gain estimated for 2012. Both warehouses and hotels will benefit from lower vacancy rates, while store construction will feature more upgrades to existing space and the derived lift coming from gains for single family housing. The increase for office construction will be modest, as new privately financed projects continue to be scrutinized carefully by lenders. Next year's level of commercial building in current dollars will still be more than 40% below the 2007 peak.
- Institutional building will level off, following the steep 13% drop estimated for 2012. For educational facilities, K-12 construction will slip further while college and university construction should at least stabilize. Healthcare facilities are expected to make a modest rebound after this year's downturn.
- The manufacturing building category will grow 8%, showing improvement after its 2012 decline.
- Public works construction will slide an additional 1%, as federal spending cuts in particular restrain environmental projects. The new two-year federal transportation bill should help to limit the impact of spending cuts on highways and bridges.
- Electric utility construction will drop 31%, after reaching a record high in current dollars during 2012. This year was boosted by the start of two very large nuclear power plants, and projects of similar magnitude are not expected for 2013. The expiration of federal loan guarantees for renewable energy projects would also dampen construction in 2013.
The 2013 Dodge Construction Outlook was presented at McGraw-Hill Construction's 74th annual Outlook Executive Conference in Washington, D.C. Copies of the report with additional details by building sector can be ordered at http://analyticsstore.construction.com/index.php/2013-dodge-construction-outlook.html. Additional reports and projections are available from McGraw-Hill Construction Research and Analytics, http://construction.com/market_research.
About McGraw-Hill Construction:
McGraw-Hill Construction's data, analytics, and media businesses—Dodge, Sweets, Architectural Record, and Engineering News-Record— create opportunities for owners, architects, engineers, contractors, building product manufacturers, and distributors to strengthen their market position, size their markets, prioritize prospects, and target and build relationships that will win more business. McGraw-Hill Construction serves more than one million customers through its trends and forecasts, industry news, and leading platform of construction data, benchmarks, and analytics. To learn more, visit www.construction.com.
About The McGraw-Hill Companies:
McGraw-Hill announced on September 12, 2011, its intention to separate into two companies: McGraw-Hill Financial, a leading provider of content and analytics to global financial markets, and McGraw-Hill Education, a leading education company focused on digital learning and education services worldwide. McGraw-Hill Financial's leading brands include Standard & Poor's Ratings Services, S&P Capital IQ, S&P Dow Jones Indices, Platts energy information services and J.D. Power and Associates. With sales of $6.2 billion in 2011, the Corporation has approximately 23,000 employees across more than 280 offices in 40 countries. Additional information is available at http://www.mcgraw-hill.com/.
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SOURCE McGraw-Hill Construction